Part Time or Seasonal Help According to the IRS

The popup of random Halloween-themed stores across old, vacant buildings across the United States means one thing: shoppers are coming. While recent events may force some shoppers to opt for a virtual option this year such as Amazon, brick and mortar stores still expect shoppers to show up for the busiest part of the year for retail stores thanks to the approaching holidays.

Businesses often need to hire workers on a seasonal or part-time basis. Not all employers may need to seek part time or seasonal employees for only holidays. For example, some businesses may need seasonal help for sporting events, holidays, and commercial fishing or harvest seasons. Whether you are getting paid or paying someone else, questions often arise over the tax treatment of payments for part-time and seasonal help.

Part-time and seasonal employees are subject to the same tax withholding rules that apply to other employees. This means that businesses should follow the same procedures for these employees that they would any other employee. Seasonal employers do not have to file a Form 941 for quarters in which they have no tax liability because they have paid no wages. To tell the IRS that a business will not file a return for one or more quarters during the year, check the Seasonal Employer box in part 3 on the Form 941 for every quarter that is filed.

When you fill out Form 941, be sure to check the box on the top of the form that corresponds to the quarter reported. Generally, the IRS will not inquire about unfiled returns if at least one taxable return is filed each year. However, you must check the "Seasonal Employer" box on every Form 941 you file.

Part time employment is often beneficial for both the employer and the employee as long as the proper rules are followed with regards to employment law and taxation. The professionals at The Center for Financial, Legal, and Tax Planning are more than knowledgeable with regards to the tax code and other ways to ensure compliance with IRS guidelines. Please contact us at (618) 997-3436 with any questions.